Despite weeks of preparation, Bernanke’s statement triggered a full-scale “taper tantrum.” In a matter of seconds yields surged from 2.17 to 2.3 percent. Two days later they had risen to 2.55 percent and would peak at 2.66 percent. These were small changes in absolute terms, but amounted to an increase in interest costs of almost 25 percent and inflicted a correspondingly serious capital loss on bondholders. US equity markets reacted in sympathy, losing 4.3 percent in a matter of days.
